Rating

Credit rating of the City of Ostrava by Moody’s – December 2023 update: Aa3/stable

Credit rating determines the economic quality of the entity, its ability to repay all of its debts on time and in full. It is carried out by independent rating agencies which express their final assessment in the form of a credit rating grade from a rating scale. Assigning long-term rating also includes the assignment of an outlook that determines the future direction of the rating, usually in the medium term. The rating can affect the prices of resources (bonds, notes, loans) that an entity can obtain on the financial markets.

The creditworthiness assessment of the City of Ostrava has been carried out since 1996. Over the years, Ostrava has been rated by two independent global rating agencies, Moody’s and Standard & Poor’s. Currently, it is Moody’s who rates Ostrava.

Ostrava has been rated by Moody’s since 1997. In 1997–2001, the rating was first carried out on debt securities. Since 2002, Ostrava has also been included in the issuer rating. The awarded rating grade has seen an upward trend over the years, i.e. the city has worked its way from Baa1 rating to its so far highest grade of Aa3 (see table).

Table Development of Ostrava’s rating in 2002–2023

year

2002

2003 - 2005

2006 - 2015

2016

2017

2018

 2019
May

 2019
October

rating

Baa1

A3

A2

A2

A1

A1

 A1

 Aa3

outlook

-

stable

stable

positive

stable

positive

 positive

 stable

year

2020 - 2021

2022

June

2022

August

2023

June

2023

December

rating

Aa3

Aa3

Aa3

Aa3 

Aa3

outlook

stable

stable

negative

 negative

stable

In June 2023, Moody’s affirmed the City of Ostrava’s current Aa3 rating with a negative outlook based on a detailed review of the City’s performance over the past year, its current financial position, financial outlook and taking into account the environmental, social and governmental risks.

In December 2023 Moody's agency changed the outlook of the city of Ostrava from negative to stable and confirmed the current long-term rating at the Aa3 level. It accepted this measure after it had made the same change in the rating outlook for the Czech Republic (24/11/2023) due to a significant reduction in risks related to Russian gas supplies, taking into account the approved fiscal consolidation in the amount of approximately 2% of GDP for the next two years, which stabilizes public debt finances at the current level, and progress in the preparation of the pension reform.

The Aa3 rating of the City of Ostrava reflects the following factors:

₋         the continued trend of solid economic management despite the slowdown in the national economy;

₋         the City’s sufficient liquidity despite significant investment actions planned for 2023–2024;

₋         a decline in the City’s debt between 2023 and 2024;

₋         a steady decline in population;

₋         the investment needs that may adversely affect the City’s strong financial results in the future.

The rating outlook is stable – it reflects the same change in the Czech Republic's rating outlook and the close mutual relations of the city and the national economy. Moody's agency assumes that the city of Ostrava will maintain the current level of operating management, strong liquidity and medium to moderate level of indebtedness.

The city of Ostrava thus achieved the highest possible rating, which is identical with the rating of the Czech Republic (Aa3 with a stable outlook). The city of Prague and Brno achieved the same rating, which results from the rating assessments currently published on the website of the Moody's agency.

Table Credit rating of selected entities

Entity

Moody’s rating

Prague

Aa3/stable

Brno

Aa3/stable

Ostrava

Aa3/stable

Moravian-Silesian Region

A1/stable

Czech Republic

Aa3/stable

  Source: Moody´s website - December 2023